Saad Ullah
Gold (XAU/USD) faces downward pressure as the USD strengthens ahead of the NFP report, while geopolitical tensions offer some support.
Gold Price: Facing Headwinds Amid USD Strength
XAU price is experiencing a second consecutive day of decline, maintaining a downward trajectory during the early European session. The US Dollar is bolstered by hawkish sentiments expressed by Federal Reserve (Fed) officials, contributing to the precious metal's decline. Additionally, the anticipation surrounding the release of the US Nonfarm Payrolls (NFP) report is influencing market sentiment, potentially impacting the demand for gold.
Federal Reserve officials' cautious stance regarding potential interest rate cuts prompts profit-taking activities surrounding XAU. Comments from Richmond Fed President Thomas Barkin and Minneapolis Fed Bank President Neel Kashkari hint at the possibility of rate cuts, but contingent upon sustained progress in inflation. These remarks have elevated US Treasury bond yields, further strengthening the USD and placing downward pressure on gold prices.
Geopolitical Factors and Safe-Haven Appeal
Geopolitical tensions, including the Russia-Ukraine conflict and escalating tensions in the Middle East, continue to support gold's safe-haven status. Concerns regarding potential retaliation from Iran following an attack on its embassy in Syria, alongside other global uncertainties, contribute to investor sentiment favoring gold as a hedge against risk.
Investors are closely monitoring the upcoming US monthly jobs report, anticipating insights into the labor market's performance. Forecasts suggest an addition of 200K jobs in March, with expectations for the unemployment rate to remain steady at 3.9%. Additionally, market reactions to Average Hourly Earnings data will influence expectations regarding the Fed's monetary policy trajectory, subsequently impacting gold prices.
Technical Analysis
Technically, XAU faces a critical support level of around $2,265, below which further downside towards the $2,200 psychological mark is conceivable. Conversely, a breach above $2,289 may signal bullish momentum, potentially driving prices towards $2,300 and beyond.
In conclusion, XAU prices are influenced by a combination of factors, including USD strength, geopolitical tensions, and economic data releases. Traders remain vigilant for cues from the NFP report and technical levels for potential market direction.
Saad Ullah
